Britain rejected criticism that sacrifices it made on Washington's behalf had failed to influence US foreign policy and that the war in Iraq was a terrible mistake.

Britain on Tuesday rejected criticism that huge sacrifices it made on Washington's behalf had failed to influence US foreign policy and that the war in Iraq was a "terrible mistake".

Foreign Secretary Margaret Beckett dismissed the judgment by one of the country's most respected think-tanks, Chatham House, and also rebuffed the suggestion that Prime Minister Tony Blair was wasting his time on an ongoing Middle East tour.

A Chatham House briefing paper said the 2003 Iraq invasion, led by the United States but strongly backed by Britain, would resonate long after Blair leaves office next year.

"The whole basic thesis of this note is just plain wrong," Beckett told BBCradio, responding to the report.

"What I would certainly not dispute is that, on what people tend to call loosely the Arab street, Britain's standing has been affected by the events of recent years.

"But when it comes to the governments, the negotiators, the people who are trying to do deals, the people who are trying to bring things together, the people who want advice and support and so on, Tony Blair's influence continues to be substantial," she said.

The Chatham House report, which came as Blair was in Abu Dhabi on the latest leg of his Middle East tour, said Iraq was a foreign policy "watershed" which, like the 1956 Suez crisis, would alter ties with the United States for many years to come.

"The post 9/11 decision to invade Iraq was a terrible mistake and the current debacle will have policy repercussions for many years to come," the paper added.

"The root failure of Tony Blair's foreign policy has been its inability to influence the Bush administration in any significant way despite the sacrifice—military, political and financial—that the United Kingdom has made," said the paper, penned by outgoing Chatham House director Victor Bulmer-Thomas.

Blair stands accused by the report of over-estimating the extent of his influence in Washington.

"The bilateral relationship with the United States may be 'special' to Britain, but the US has never described it as more than 'close'," it said.

Blair, who is due to step down next year, has insisted that reviving the dormant Israel-Palestinian peace process remains possible, seeing it as part of "whole Middle East" policy also taking in Lebanon, Iraq and elsewhere.

On Monday he travelled to Jerusalem and Ramallah as part of a tour of the region, notably offering support for Palestinian president Mahmud Abbas over his controversial call for early elections.

Critics say that Blair, much like US President George W Bush, is a political lame duck, but Beckett said Blair's efforts were completely justified.

"That is why he is there, because people want to talk to him and they want him to talk to them," she said.

And she added: "I don't accept... that what is happening in the Middle East is all about the war in Iraq. It is one in a string of events in and around the Middle East.

"The Middle East has always been a dangerous place. It remains so. That is why the prime minister is there at present, to see what can be done to bring those warring factions together.